Accountant Grant Thornton LLP, the court-appointed administrator for the two bankrupt holding companies behind British rackets, health and country club chain Esporta Group Ltd., has asked for an extra year to sell the business, the Daily Telegraph reported.
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Seeking court permission for an extension does not necessarily mean the auction isn't getting anywhere, since the newspaper suggests a sale could be clinched as early as next month, citing well-placed sources. It just means that Esporta has been operating under the shadow of bankruptcy for a year and hasn't been getting more valuable as time goes on.
U.S. investment bank Greenhill International LLP has been brought in to run the auction, but is not expected to get anything like the £475 million ($885 million) Syrian-born entrepreneur Simon Halabi paid for Esporta when he bought it from Duke Street Capital in early 2007. More like £150 million, claims the Daily Telegraph.
Esporta's troubles started when Halabi's lender, Société Générale SA, called in £330 million of loans last summer, plunging the holding companies into administration. Even if the auction is successful (a source close to the situation insists the process is continuing), it may be hard to raise enough to pay off the bank as well as the fees to Grant Thornton and Greenhill. The newspaper cites documents filed with Companies House, the U.K. government register, showing Grant Thornton's fees have reached £1.3 million and Greenhill has already received £1.08 million upfront.
Esporta is likely to be broken up, with the racquet clubs going to rival David Lloyd Leisure Ltd. and the gyms to LA Fitness plc and another health chain, the Bannatyne Fitness Ltd. - Jonathan Braude
